BILL REQ. #:  S-3042.1 

     AN ACT Relating to improving sales tax compliance; amending RCW 82.04.051, 82.04.060, 82.04.190, 82.08.841, 82.08.890, 82.08.900, 82.08.980, 82.12.841, 82.12.890, 82.12.900, 82.12.980, 82.32.045, 82.04.470, 82.08.050, 82.08.130, 82.14B.042, 82.14B.200, 82.32.087, 82.32.290, 82.32.291, 82.32.330, 82.72.040, and 82.72.070; reenacting and amending RCW 82.04.050; adding new sections to chapter 82.08 RCW; adding new sections to chapter 82.12 RCW; adding a new section to chapter 82.14 RCW; adding a new section to chapter 82.32 RCW; creating new sections; prescribing penalties; and providing an effective date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 101   The legislature finds that the department of revenue's 2008 compliance study estimates that sales tax noncompliance exceeds well over one hundred million dollars annually in unpaid state and local sales and use taxes. The study further indicates that sales tax noncompliance occurs most frequently for construction at 80.7 percent of all firms in this industry.
     The legislature intends to address this significant problem by taking a two-pronged approach.
     First, this act changes the excise taxation of construction businesses and others who render services in respect to real property. Beginning January 1, 2010: (1) The purchase of materials and subcontractor services for all retail construction and other retail real property improvement projects will become retail sales; (2) contractors and other persons who render services in respect to real property will pay retail sales tax on all such purchases; (3) to avoid the pyramiding of sales tax, contractors and other persons who render services in respect to real property will be entitled to claim a credit on their excise tax returns for the amount of retail sales or use taxes paid on the purchase or use of materials incorporated into, and subcontractor services purchased for, retail construction and other retail real property improvement projects; and (4) sales and use tax exemptions are provided or modified so as not to affect the sales and use taxation of construction projects within the scope of a sales and use tax deferral certificate issued by the department of revenue or a specific sales and use tax exemption provided in chapters 82.08 and 82.12 RCW.
     Second, this act also eliminates the use of resale certificates to document wholesale purchases. Resale certificates will be replaced with seller's permits, which will be issued by the department of revenue only to those businesses that make wholesale purchases, such as retailers, wholesalers, and manufacturers. Businesses that do not make wholesale purchases, such as construction businesses and most service businesses, will not be entitled to a seller's permit.

Sec. 201   RCW 82.04.050 and 2007 c 54 s 4 and 2007 c 6 s 1004 are each reenacted and amended to read as follows:
     (1) "Sale at retail" or "retail sale" means every sale of tangible personal property (including articles produced, fabricated, or imprinted) to all persons irrespective of the nature of their business and including, among others, without limiting the scope hereof, persons who install, repair, clean, alter, improve, construct, or decorate real or personal property of or for consumers other than a sale to a person who presents a ((resale certificate under)) seller's permit or uniform exemption certificate in conformity with RCW 82.04.470 and who:
     (a) Purchases for the purpose of resale as tangible personal property in the regular course of business without intervening use by such person, but a purchase for the purpose of resale by a regional transit authority under RCW 81.112.300 is not a sale for resale; or
     (b) Installs, repairs, cleans, alters, imprints, or improves((, constructs, or decorates real or)) personal property of or for consumers, if such tangible personal property becomes an ingredient or component of such ((real or)) personal property without intervening use by such person; or
     (c) Purchases for the purpose of consuming the property purchased in producing for sale a new article of tangible personal property or substance, of which such property becomes an ingredient or component or is a chemical used in processing, when the primary purpose of such chemical is to create a chemical reaction directly through contact with an ingredient of a new article being produced for sale; or
     (d) Purchases for the purpose of consuming the property purchased in producing ferrosilicon which is subsequently used in producing magnesium for sale, if the primary purpose of such property is to create a chemical reaction directly through contact with an ingredient of ferrosilicon; or
     (e) Purchases for the purpose of providing the property to consumers as part of competitive telephone service, as defined in RCW 82.04.065. The term shall include every sale of tangible personal property which is used or consumed or to be used or consumed in the performance of any activity classified as a "sale at retail" or "retail sale" even though such property is resold or utilized as provided in (a), (b), (c), (d), or (e) of this subsection following such use. The term also means every sale of tangible personal property to persons engaged in any business which is taxable under RCW 82.04.280 (2) and (7), 82.04.290, and 82.04.2908; or
     (f) Purchases for the purpose of satisfying the person's obligations under an extended warranty as defined in subsection (7) of this section, if such tangible personal property replaces or becomes an ingredient or component of property covered by the extended warranty without intervening use by such person.
     (2) The term "sale at retail" or "retail sale" shall include the sale of or charge made for tangible personal property consumed and/or for labor and services rendered in respect to the following:
     (a) The installing, repairing, cleaning, altering, imprinting, or improving of tangible personal property of or for consumers, including charges made for the mere use of facilities in respect thereto, but excluding charges made for the use of self-service laundry facilities, and also excluding sales of laundry service to nonprofit health care facilities, and excluding services rendered in respect to live animals, birds and insects;
     (b) The constructing, repairing, decorating, or improving of new or existing buildings or other structures under, upon, or above real property of or for consumers, including the installing or attaching of any article of tangible personal property therein or thereto, whether or not such personal property becomes a part of the realty by virtue of installation, and shall also include the sale of services or charges made for the clearing of land and the moving of earth excepting the mere leveling of land used in commercial farming or agriculture;
     (c) The constructing, repairing, or improving of any structure upon, above, or under any real property owned by an owner who conveys the property by title, possession, or any other means to the person performing such construction, repair, or improvement for the purpose of performing such construction, repair, or improvement and the property is then reconveyed by title, possession, or any other means to the original owner;
     (d) The cleaning, fumigating, razing, or moving of existing buildings or structures, but shall not include the charge made for janitorial services; and for purposes of this section the term "janitorial services" shall mean those cleaning and caretaking services ordinarily performed by commercial janitor service businesses including, but not limited to, wall and window washing, floor cleaning and waxing, and the cleaning in place of rugs, drapes and upholstery. The term "janitorial services" does not include painting, papering, repairing, furnace or septic tank cleaning, snow removal or sandblasting;
     (e) Automobile towing and similar automotive transportation services, but not in respect to those required to report and pay taxes under chapter 82.16 RCW;
     (f) The furnishing of lodging and all other services by a hotel, rooming house, tourist court, motel, trailer camp, and the granting of any similar license to use real property, as distinguished from the renting or leasing of real property, and it shall be presumed that the occupancy of real property for a continuous period of one month or more constitutes a rental or lease of real property and not a mere license to use or enjoy the same. For the purposes of this subsection, it shall be presumed that the sale of and charge made for the furnishing of lodging for a continuous period of one month or more to a person is a rental or lease of real property and not a mere license to enjoy the same;
     (g) Persons taxable under (a), (b), (c), (d), (e), and (f) of this subsection when such sales or charges are for property, labor and services which are used or consumed in whole or in part by such persons in the performance of any activity defined as a "sale at retail" or "retail sale" even though such property, labor and services may be resold after such use or consumption. Nothing contained in this subsection shall be construed to modify subsection (1) of this section and nothing contained in subsection (1) of this section shall be construed to modify this subsection.
     (3) The term "sale at retail" or "retail sale" shall include the sale of or charge made for personal, business, or professional services including amounts designated as interest, rents, fees, admission, and other service emoluments however designated, received by persons engaging in the following business activities:
     (a) Amusement and recreation services including but not limited to golf, pool, billiards, skating, bowling, ski lifts and tows, day trips for sightseeing purposes, and others, when provided to consumers;
     (b) Abstract, title insurance, and escrow services;
     (c) Credit bureau services;
     (d) Automobile parking and storage garage services;
     (e) Landscape maintenance and horticultural services but excluding (i) horticultural services provided to farmers and (ii) pruning, trimming, repairing, removing, and clearing of trees and brush near electric transmission or distribution lines or equipment, if performed by or at the direction of an electric utility;
     (f) Service charges associated with tickets to professional sporting events; and
     (g) The following personal services: Physical fitness services, tanning salon services, tattoo parlor services, steam bath services, turkish bath services, escort services, and dating services.
     (4)(a) The term shall also include:
     (i) The renting or leasing of tangible personal property to consumers; and
     (ii) Providing tangible personal property along with an operator for a fixed or indeterminate period of time. A consideration of this is that the operator is necessary for the tangible personal property to perform as designed. For the purpose of this subsection (4)(a)(ii), an operator must do more than maintain, inspect, or set up the tangible personal property.
     (b) The term shall not include the renting or leasing of tangible personal property where the lease or rental is for the purpose of sublease or subrent.
     (5) The term shall also include the providing of "competitive telephone service," "telecommunications service," or "ancillary services," as those terms are defined in RCW 82.04.065, to consumers.
     (6) The term shall also include the sale of prewritten computer software other than a sale to a person who presents a ((resale certificate under)) seller's permit or uniform exemption certificate in conformity with RCW 82.04.470, regardless of the method of delivery to the end user, but shall not include custom software or the customization of prewritten computer software.
     (7) The term shall also include the sale of or charge made for an extended warranty to a consumer. For purposes of this subsection, "extended warranty" means an agreement for a specified duration to perform the replacement or repair of tangible personal property at no additional charge or a reduced charge for tangible personal property, labor, or both, or to provide indemnification for the replacement or repair of tangible personal property, based on the occurrence of specified events. The term "extended warranty" does not include an agreement, otherwise meeting the definition of extended warranty in this subsection, if no separate charge is made for the agreement and the value of the agreement is included in the sales price of the tangible personal property covered by the agreement. For purposes of this subsection, "sales price" has the same meaning as in RCW 82.08.010.
     (8) The term shall not include the sale of or charge made for labor and services rendered in respect to the building, repairing, or improving of any street, place, road, highway, easement, right-of-way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle which is owned by a municipal corporation or political subdivision of the state or by the United States and which is used or to be used primarily for foot or vehicular traffic including mass transportation vehicles of any kind.
     (9) The term shall also not include sales of chemical sprays or washes to persons for the purpose of postharvest treatment of fruit for the prevention of scald, fungus, mold, or decay, nor shall it include sales of feed, seed, seedlings, fertilizer, agents for enhanced pollination including insects such as bees, and spray materials to: (a) Persons who participate in the federal conservation reserve program, the environmental quality incentives program, the wetlands reserve program, and the wildlife habitat incentives program, or their successors administered by the United States department of agriculture; (b) farmers for the purpose of producing for sale any agricultural product; and (c) farmers acting under cooperative habitat development or access contracts with an organization exempt from federal income tax under 26 U.S.C. Sec. 501(c)(3) or the Washington state department of fish and wildlife to produce or improve wildlife habitat on land that the farmer owns or leases.
     (10) The term shall not include the sale of or charge made for labor and services rendered in respect to the constructing, repairing, decorating, or improving of new or existing buildings or other structures under, upon, or above real property of or for the United States, any instrumentality thereof, or a county or city housing authority created pursuant to chapter 35.82 RCW, including the installing, or attaching of any article of tangible personal property therein or thereto, whether or not such personal property becomes a part of the realty by virtue of installation. Nor shall the term include the sale of services or charges made for the clearing of land and the moving of earth of or for the United States, any instrumentality thereof, or a county or city housing authority. Nor shall the term include the sale of services or charges made for cleaning up for the United States, or its instrumentalities, radioactive waste and other byproducts of weapons production and nuclear research and development.
     (11) The term shall not include the sale of or charge made for labor, services, or tangible personal property pursuant to agreements providing maintenance services for bus, rail, or rail fixed guideway equipment when a regional transit authority is the recipient of the labor, services, or tangible personal property, and a transit agency, as defined in RCW 81.104.015, performs the labor or services.

Sec. 202   RCW 82.04.051 and 1999 c 212 s 2 are each amended to read as follows:
     (1)(a) As used in RCW 82.04.050, the term "services rendered in respect to" means those services that are directly related to the constructing, building, repairing, improving, and decorating of buildings or other structures and that are performed by a person who is responsible for the performance of the constructing, building, repairing, improving, or decorating activity.
     (b) The term does not include services such as engineering, architectural, surveying, flagging, accounting, legal, consulting, or administrative services provided to the consumer of, or person responsible for performing, the constructing, building, repairing, improving, or decorating services.
     (2) A contract or agreement under which a person is responsible for both services that would otherwise be subject to tax as a service under RCW 82.04.290(2) and also constructing, building, repairing, improving, or decorating activities that would otherwise be subject to tax under another section of this chapter is subject to the tax that applies to the predominant activity under the contract or agreement.
     (3) Unless otherwise provided by law, a contract or agreement under which a person is responsible for activities that are subject to tax as a service under RCW 82.04.290(2), and a subsequent contract or agreement under which the same person is responsible for constructing, building, repairing, improving, or decorating activities subject to tax under another section of this chapter, shall not be combined and taxed as a single activity if at the time of the first contract or agreement it was not contemplated by the parties, as evidenced by the facts, that the same person would be awarded both contracts.
     (4)(a) As used in this section "responsible for the performance" means that the person is obligated to perform all or a portion of the activities, either personally or through a third party. ((A person who))
     (b) A person is not responsible for the performance of the work if the person: (i) Reviews work for a consumer((,)) or retailer((, or wholesaler)) but does not supervise or direct the work ((is not responsible for the performance of the work. A person who)); or (ii) is financially obligated for the work, such as a bank, but ((who)) does not have control over the work itself ((is not responsible for the performance of the work)).

Sec. 203   RCW 82.04.060 and 2007 c 6 s 1007 are each amended to read as follows:
     "Sale at wholesale" or "wholesale sale" means:
     (1) Any sale of the following that is not a sale at retail:
     (a) Tangible personal property((, any sale of));
     (b) Services defined as a retail sale in RCW 82.04.050(2)(a)((, any sale of));
     (c) Amusement or recreation services as defined in RCW 82.04.050(3)(a)((, any sale of canned));
     (d) Prewritten computer software((,));
     (e) Any sale of an extended warranty as defined in RCW 82.04.050(7)((, or any sale of));
     (f) Competitive telephone service, ancillary services, or telecommunications service as those terms are defined in RCW 82.04.065((, which is not a sale at retail)); and
     (2) Any charge made for labor and services rendered for persons who are not consumers, in respect to ((real or)) personal property, if such charge is expressly defined as a retail sale by RCW 82.04.050 when rendered to or for consumers((: PROVIDED, That)). The term "((real or)) personal property" as used in this subsection ((shall)) (2) may not include any natural products named in RCW 82.04.100.

Sec. 204   RCW 82.04.190 and 2007 c 6 s 1008 are each amended to read as follows:
     "Consumer" means the following:
     (1) Any person who purchases, acquires, owns, holds, or uses any article of tangible personal property irrespective of the nature of the person's business and including, among others, without limiting the scope hereof, persons who install, repair, clean, alter, improve, construct, or decorate real or personal property of or for consumers other than for the purpose (a) of resale as tangible personal property in the regular course of business or (b) of incorporating such property as an ingredient or component of real or personal property when installing, repairing, cleaning, altering, imprinting, or improving((, constructing, or decorating)) such ((real or)) personal property of or for consumers or (c) of consuming such property in producing for sale a new article of tangible personal property or a new substance, of which such property becomes an ingredient or component or as a chemical used in processing, when the primary purpose of such chemical is to create a chemical reaction directly through contact with an ingredient of a new article being produced for sale or (d) of consuming the property purchased in producing ferrosilicon which is subsequently used in producing magnesium for sale, if the primary purpose of such property is to create a chemical reaction directly through contact with an ingredient of ferrosilicon or (e) of satisfying the person's obligations under an extended warranty as defined in RCW 82.04.050(7), if such tangible personal property replaces or becomes an ingredient or component of property covered by the extended warranty without intervening use by such person;
     (2)(a) Any person engaged in any business activity taxable under RCW 82.04.290 or 82.04.2908; (b) any person who purchases, acquires, or uses any competitive telephone service, ancillary services, or telecommunications service as those terms are defined in RCW 82.04.065, other than for resale in the regular course of business; (c) any person who purchases, acquires, or uses any service defined in RCW 82.04.050(2)(a), other than for resale in the regular course of business or for the purpose of satisfying the person's obligations under an extended warranty as defined in RCW 82.04.050(7); (d) any person who purchases, acquires, or uses any amusement and recreation service defined in RCW 82.04.050(3)(a), other than for resale in the regular course of business; (e) any person who is an end user of software; and (f) any person who purchases or acquires an extended warranty as defined in RCW 82.04.050(7) other than for resale in the regular course of business;
     (3) Any person engaged in the business of contracting for the building, repairing or improving of any street, place, road, highway, easement, right-of-way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle which is owned by a municipal corporation or political subdivision of the state of Washington or by the United States and which is used or to be used primarily for foot or vehicular traffic including mass transportation vehicles of any kind as defined in RCW 82.04.280, in respect to tangible personal property when such person incorporates such property as an ingredient or component of such publicly owned street, place, road, highway, easement, right-of-way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle by installing, placing or spreading the property in or upon the right-of-way of such street, place, road, highway, easement, bridge, tunnel, or trestle or in or upon the site of such mass public transportation terminal or parking facility;
     (4) Any person who is an owner, lessee or has the right of possession to or an easement in real property which is being constructed, repaired, decorated, improved, or otherwise altered by a person engaged in business, excluding only (a) municipal corporations or political subdivisions of the state in respect to labor and services rendered to their real property which is used or held for public road purposes, and (b) the United States, instrumentalities thereof, and county and city housing authorities created pursuant to chapter 35.82 RCW in respect to labor and services rendered to their real property. Nothing contained in this or any other subsection of this definition shall be construed to modify any other definition of "consumer";
     (5) Any person who is an owner, lessee, or has the right of possession to personal property which is being constructed, repaired, improved, cleaned, imprinted, or otherwise altered by a person engaged in business;
     (6) Any person engaged in the business of constructing, repairing, decorating, or improving new or existing buildings or other structures under, upon, or above real property of or for the United States, any instrumentality thereof, or a county or city housing authority created pursuant to chapter 35.82 RCW, including the installing or attaching of any article of tangible personal property therein or thereto, whether or not such personal property becomes a part of the realty by virtue of installation; also, any person engaged in the business of clearing land and moving earth of or for the United States, any instrumentality thereof, or a county or city housing authority created pursuant to chapter 35.82 RCW. Any such person shall be a consumer within the meaning of this subsection in respect to tangible personal property incorporated into, installed in, or attached to such building or other structure by such person, except that consumer does not include any person engaged in the business of constructing, repairing, decorating, or improving new or existing buildings or other structures under, upon, or above real property of or for the United States, or any instrumentality thereof, if the investment project would qualify for sales and use tax deferral under chapter 82.63 RCW if undertaken by a private entity;
     (7) Any person who is a lessor of machinery and equipment, the rental of which is exempt from the tax imposed by RCW 82.08.020 under RCW 82.08.02565, with respect to the sale of or charge made for tangible personal property consumed in respect to repairing the machinery and equipment, if the tangible personal property has a useful life of less than one year. Nothing contained in this or any other subsection of this section shall be construed to modify any other definition of "consumer";
     (8) Any person engaged in the business of cleaning up for the United States, or its instrumentalities, radioactive waste and other byproducts of weapons production and nuclear research and development; ((and))
     (9) Any person who is an owner, lessee, or has the right of possession of tangible personal property that, under the terms of an extended warranty as defined in RCW 82.04.050(7), has been repaired or is replacement property, but only with respect to the sale of or charge made for the repairing of the tangible personal property or the replacement property;
     (10) Any person engaged in the business of constructing, repairing, decorating, or improving new or existing buildings or other structures under, upon, or above real property of or for consumers as defined in subsection (4) of this section.
     (a) A person is a consumer under this subsection in respect to: (i) Tangible personal property incorporated into, installed in, or attached to buildings or other structures located under, upon, or above real property of or for consumers as defined in subsection (4) of this section, by such person, during the course of constructing, repairing, decorating, or improving such buildings or other structures; and (ii) the purchase of labor and services defined as a retail sale in RCW 82.04.050(2)(b) for the purposes of fulfilling the purchaser's own obligation to perform labor and services defined as a retail sale in RCW 82.04.050(2) (b) or (c).
     (b) A person who is a consumer under this subsection (10) may also be a consumer under other provisions of this section; and
     (11) Any person performing services described in RCW 82.04.050(3)(e).
     (a) A person is a consumer under this subsection in respect to: (i) Tangible personal property incorporated into, installed in, or attached to real property by such person during the course of rendering services described in RCW 82.04.050(3)(e); and (ii) the purchase of services defined as a retail sale in RCW 82.04.050(3)(e) for the purposes of fulfilling the purchaser's own obligation to perform services defined as a retail sale in RCW 82.04.050(3)(e).
     (b) A person who is a consumer under this subsection (11) may also be a consumer under other provisions of this section.

NEW SECTION.  Sec. 205   A new section is added to chapter 82.08 RCW to read as follows:
     (1) For purposes of this section, the following definitions apply:
     (a) "Construction services" means those services included within the definition of retail sale in RCW 82.04.050 (2) (b) and (c) and (3)(e).
     (b) "Eligible taxpayer" means a taxpayer who:
     (i) Makes sales of construction services in this state; and
     (ii)(A) Has paid state sales or use taxes on the purchase or use of tangible personal property that became an ingredient or component, without intervening use, of buildings, other structures, or other real property in respect to which the taxpayer rendered construction services in this state; or
     (B) Has paid state sales tax on the purchase of construction services in order to fulfill the taxpayer's obligation to perform construction services in this state.
     (c) "State sales taxes" means a sales tax, as defined in RCW 82.56.010, imposed by this or any other state or by a local taxing authority of a state other than Washington, including the tax imposed in RCW 82.08.020.
     (d) "State use taxes" means a use tax, as defined in RCW 82.56.010, imposed by this or any other state or by a local taxing authority of a state other than Washington, including the tax imposed in RCW 82.12.020.
     (e) "Tax return" means a document a taxpayer files with the department, or information transmitted electronically to the department by the taxpayer, to report taxes due under this chapter.
     (2) An eligible taxpayer is entitled to a credit against the tax imposed in RCW 82.08.020 and otherwise required to be remitted to the department. The credit is equal to the amount of any:
     (a) Legally imposed state sales taxes properly paid by the taxpayer on the purchase of tangible personal property that became an ingredient or component, without intervening use, of buildings, other structures, or other real property in respect to which the taxpayer rendered construction services in this state taxable under RCW 82.08.020; and
     (b) The amount of taxes imposed in RCW 82.08.020 properly paid by the taxpayer on the purchase of construction services for the purposes of fulfilling the taxpayer's obligation to perform construction services in this state taxable under RCW 82.08.020.
     (3) Credit under this section may not be claimed until:
     (a) The tangible personal property in respect to which the credit is claimed has become an ingredient or component of buildings, other structures, or other real property in respect to which the taxpayer rendered construction services in this state; and
     (b) The construction services in respect to which the credit is claimed have been performed.
     (4) Credit may not be claimed for state sales tax liability accrued but not paid to the seller. The amount of credit claimed on a tax return may not exceed the amount of tax otherwise due under RCW 82.08.020 for the tax reporting period for which the credit is claimed. Unused credit amounts may be carried forward and claimed on tax returns for subsequent tax reporting periods. No refunds may be granted for credits under this section.
     (5) Taxpayers claiming a credit must keep and preserve records that show the names of the sellers from whom the tangible personal property or construction services were purchased, the date of the purchase, the type of tangible personal property or construction services purchased, the amount of the purchase, the sales taxes that were paid on the tangible personal property or construction services, and information about the project for which the tangible personal property or construction services were purchased. The requirements in this subsection may not be construed as a limitation on RCW 82.32.070.
     (6) Nothing in this section may be construed to relieve an eligible taxpayer from its obligation to pay the tax imposed in RCW 82.08.020 on the purchase of tangible personal property that will become an ingredient or component, without intervening use, of buildings, other structures, or other real property in respect to which the taxpayer will render construction services, or on the purchase of construction services for the purposes of fulfilling the taxpayer's obligation to perform construction services.

NEW SECTION.  Sec. 206   A new section is added to chapter 82.12 RCW to read as follows:
     (1) An eligible taxpayer is entitled to a credit against the tax imposed under RCW 82.12.020 as provided in this section. Eligible taxpayers claiming the credit must first pay the applicable state use taxes and may then claim the credit.
     (2) The credit is equal to the amount of any legally imposed state use taxes properly paid by the taxpayer on the use of tangible personal property that became an ingredient or component, without intervening use, of buildings, other structures, or other real property in respect to which the taxpayer rendered construction services in this state taxable under RCW 82.08.020.
     (3) Credit under this section may not be claimed until the tangible personal property in respect to which the credit is claimed has become an ingredient or component of buildings, other structures, or other real property in respect to which the taxpayer rendered construction services in this state.
     (4) Credit may not be claimed for state use tax liability accrued but not paid. The amount of credit claimed on a tax return may not exceed the amount of tax otherwise due under RCW 82.12.020 for the tax reporting period for which the credit is claimed. Unused credit amounts may be carried forward and claimed on tax returns for subsequent tax reporting periods. No refunds may be granted for credits under this section.
     (5) Taxpayers claiming a credit must keep and preserve records that show the names of the sellers from whom the tangible personal property was purchased, the date of the purchase, the type of tangible personal property purchased, the amount of the purchase, the use taxes that were paid on the tangible personal property, and information about the project for which the tangible personal property was purchased.
     (6) Nothing in this section may be construed to relieve an eligible taxpayer from its obligation to pay the tax imposed in RCW 82.12.020 on the use of tangible personal property that will become an ingredient or component, without intervening use, of buildings, other structures, or other real property in respect to which the taxpayer will render construction services in this state.
     (7) The definitions in section 205 of this act apply to this section.

NEW SECTION.  Sec. 207   A new section is added to chapter 82.14 RCW to read as follows:
     (1)(a) A taxpayer who is entitled to claim a credit under section 205 or 206 of this act is also entitled to claim a credit against sales and use taxes paid under this chapter and RCW 81.104.170.
     (b) The credit is equal to the amount of any:
     (i) Local sales and use taxes properly paid by the taxpayer on the purchase or use of tangible personal property that became an ingredient or component, without intervening use, of buildings, other structures, or other real property in respect to which the taxpayer rendered construction services in this state taxable under RCW 82.08.020; and
     (ii) Local sales taxes properly paid by the taxpayer on the purchase of construction services for the purposes of fulfilling the taxpayer's own obligation to perform construction services in this state taxable under RCW 82.08.020.
     (2) Credit under this section may not be claimed until:
     (a) The tangible personal property in respect to which the credit is claimed has become an ingredient or component of buildings, other structures, or other real property in respect to which the taxpayer rendered construction services in this state; and
     (b) The construction services in respect to which the credit is claimed have been performed.
     (3) Credit may not be claimed for local sales tax and local use tax liability accrued but not paid. The amount of credit claimed on a tax return may not exceed the amount of local sales and use taxes otherwise due for the tax reporting period for which the credit is claimed. Unused credit amounts may be carried forward and claimed on tax returns for subsequent tax reporting periods. No refunds may be granted for credits under this section.
     (4) No credit may be allowed under this section, including any associated credit claimed under section 205 or 206 of this act, if the tax return does not identify, in a manner required by the department: (a) In the case of a local sales tax, the location code representative of where: (i) The tangible personal property, which is the subject of the credit claim, was received; or (ii) the construction services, which are the subject of the credit claim, were performed; or (b) in the case of a local use tax, the location code used to report and pay the tax for which the credit is claimed.
     (5) Taxpayers claiming the credit must keep and preserve records that show the names of the sellers from whom the tangible personal property or construction services were purchased, the date of the purchase, the type of tangible personal property or construction services purchased, the amount of the purchase, the state and local sales or use taxes that were paid on the tangible personal property or construction services, and information about the project for which the tangible personal property or construction services were purchased.
     (6) Nothing in this section may be construed to relieve an eligible taxpayer from its obligation to pay local sales taxes or local use taxes on the purchase or use of tangible personal property that will become an ingredient or component, without intervening use, of buildings, other structures, or other real property in respect to which the taxpayer will render construction services in this state, or local sales taxes on the purchase of construction services for the purposes of fulfilling the taxpayer's obligation to perform construction services in this state.
     (7) For purposes of this section:
     (a) "Local sales taxes" means sales taxes imposed under the authority of this chapter or RCW 81.104.170.
     (b) "Local use taxes" means use taxes imposed under the authority of this chapter or RCW 81.104.170.
     (8) The definitions in section 205 of this act apply to this section.

NEW SECTION.  Sec. 208   A new section is added to chapter 82.08 RCW to read as follows:
     (1) The tax imposed in RCW 82.08.020 does not apply to the sale to a contractor of the following:
     (a) Tangible personal property to be incorporated into, installed in, or attached to buildings, other structures, or other real property, if the real property is within the scope of a sales and use tax deferral certificate for a tax-deferred project; and
     (b) Construction services rendered in respect to a tax-deferred project.
     (2) The exemption is available only if the contractor provides the seller with a copy of the sales and use tax deferral certificate issued by the department for the project in respect to which the exempt purchase relates. The seller must retain a copy of the certificate for the seller's files.
     (3)(a) The exemptions provided in this section do not apply to any person to whom the department has issued a sales and use tax deferral certificate, with respect to the tax-deferred project for which the certificate was issued.
     (b) Nothing in this section may be construed to change the sales tax treatment of any person to whom the department has issued a sales and use tax deferral certificate for a tax-deferred project.
     (4) For purposes of this section, the following definitions apply:
     (a) "Contractor" means a person engaged in the business of rendering services included within the definition of retail sale in RCW 82.04.050 (2) (b) and (c) and (3)(e).
     (b) "Construction services" means those services included within the definition of retail sale in RCW 82.04.050 (2) (b) and (c) and (3)(e).
     (c) "Tax-deferred project" means a project for which the department has issued a sales and use tax deferral certificate under RCW 36.100.090, 47.01.412, 47.46.060, 82.32.580, or chapter 82.60, 82.63, 82.74, 82.75, or 82.82 RCW.

NEW SECTION.  Sec. 209   A new section is added to chapter 82.12 RCW to read as follows:
     (1) The tax imposed in RCW 82.12.020 does not apply to the use by a contractor of tangible personal property to be incorporated into, installed in, or attached to buildings, other structures, or other real property, without intervening use, if the real property is within the scope of a sales and use tax deferral certificate for a tax-deferred project.
     (2)(a) The exemption provided in this section does not apply to any person to whom the department has issued a sales and use tax deferral certificate, with respect to the tax-deferred project for which the certificate was issued.
     (b) Nothing in this section may be construed to change the use tax treatment of any person to whom the department has issued a sales and use tax deferral certificate for a tax-deferred project.
     (3) The definitions in section 208 of this act apply to this section.

NEW SECTION.  Sec. 210   A new section is added to chapter 82.08 RCW to read as follows:
     (1) The tax imposed in RCW 82.08.020 does not apply to the sale to a contractor of the following:
     (a) Tangible personal property to be incorporated into, installed in, or attached to buildings, other structures, or other real property of or for a tribal member or an Indian tribe, if the real property is located wholly in Indian country; and
     (b) Construction services rendered in respect to real property located wholly in Indian country.
     (2) The exemption is available only if the contractor provides the seller with an exemption certificate in a form and manner prescribed by the department. The seller must retain a copy of the certificate for the seller's files.
     (3) For purposes of this section, the following definitions apply:
     (a) "Contractor" means a person engaged in the business of rendering services included within the definition of retail sale in RCW 82.04.050 (2) (b) and (c) and (3)(e).
     (b) "Construction services" means those services included within the definition of retail sale in RCW 82.04.050 (2) (b) and (c) and (3)(e).
     (c) "Indian country" has the same meaning as in 18 U.S.C. Sec. 1151.
     (d) "Indian tribe" means an Indian nation, tribe, band, community, or other entity recognized as an "Indian tribe" by the United States Department of the Interior.
     (e) "Tribal member" means a person on the tribal rolls of an Indian tribe.

NEW SECTION.  Sec. 211   A new section is added to chapter 82.12 RCW to read as follows:
     (1) The tax imposed in RCW 82.12.020 does not apply to the use by a contractor of tangible personal property to be incorporated into, installed in, or attached to buildings, other structures, or other real property of or for a tribal member or an Indian tribe, without intervening use, if the real property is located wholly in Indian country.
     (2) The definitions in section 210 of this act apply to this section.

Sec. 212   RCW 82.08.841 and 2005 c 420 s 2 are each amended to read as follows:
     (1) The tax levied by RCW 82.08.020 does not apply to:
     (a) Sales of the following machinery and equipment to qualified farmers: No-till drills, minimum-till drills, chisels, plows, sprayers, discs, cultivators, harrows, mowers, swathers, power rakes, balers, bale handlers, shredders, transplanters, tractors two hundred fifty horsepower and over designed to pull conservation equipment on steep hills and highly erodible lands, and combine components limited to straw choppers, chaff spreaders, and stripper headers; and
     (b) Labor and services rendered in respect to constructing hay sheds of or for a qualified farmer((s)) or to sales of tangible personal property ((to qualified farmers)) that becomes an ingredient or component of such hay sheds during the course of the constructing.
     (2)(a) No application is necessary for the tax exemption in this section. A person taking the exemption under this section must keep records necessary for the department to verify eligibility. The department may request from a qualified farmer, copies of farm service agency or crop insurance records for verification purposes, however information obtained from farm service agency or crop insurance records is deemed taxpayer information under RCW 82.32.330 and is not disclosable.
     (b) The exemption is available only when the buyer provides the seller with an exemption certificate in a form and manner prescribed by the department. The seller shall retain a copy of the certificate for the seller's files.
     (3) The definitions in this subsection apply to this section.
     (a) "Qualified farmer" means a farmer as defined in RCW 82.04.213 who has more than fifty percent of his or her tillable acres in cereal grains and/or field and turf grass grown for seed in qualified counties.
     (b) "Qualified counties" means those counties in Washington state where cereal grain production within the county exceeds fifteen thousand acres.
     (4) This section expires January 1, 2011.

Sec. 213   RCW 82.08.890 and 2006 c 151 s 2 are each amended to read as follows:
     (1) The tax levied by RCW 82.08.020 does not apply to sales ((to eligible persons)) of services rendered in respect to operating, repairing, cleaning, altering, or improving of livestock nutrient management equipment and facilities of or for eligible persons, or to sales of tangible personal property that becomes an ingredient or component of the equipment and facilities.
     (2)(a) To be eligible, the equipment and facilities must be used exclusively for activities necessary to maintain a livestock nutrient management plan.
     (b) The exemption applies to sales made after the livestock nutrient management plan is: (i) Certified under chapter 90.64 RCW; (ii) approved as part of the permit issued under chapter 90.48 RCW; or (iii) approved as required under subsection (4)(c)(iii) of this section.
     (3)(a) The department of revenue must provide an exemption certificate to an eligible person upon application by that person. The department of agriculture must provide a list of eligible persons, as defined in subsection (4)(c)(i) and (ii) of this section, to the department of revenue. Conservation districts must maintain lists of eligible persons as defined in subsection (4)(c)(iii) of this section to allow the department of revenue to verify eligibility. The application must be in a form and manner prescribed by the department and must contain information regarding the location of the dairy or animal feeding operation and other information the department may require.
     (b) A person claiming an exemption under this section must keep records necessary for the department to verify eligibility under this section. The exemption is available only when the buyer provides the seller with an exemption certificate in a form and manner prescribed by the department. If the buyer is not an eligible person, the buyer may provide the seller with a copy of the exemption certificate of the eligible person that owns the livestock nutrient management facility in respect to which the claim of exemption relates. The seller must retain a copy of the certificate for the seller's files.
     (4) The definitions in this subsection apply to this section and RCW 82.12.890 unless the context clearly requires otherwise:
     (a) "Animal feeding operation" means a lot or facility, other than an aquatic animal production facility, where the following conditions are met:
     (i) Animals, other than aquatic animals, have been, are, or will be stabled or confined and fed or maintained for a total of forty-five days or more in any twelve-month period; and
     (ii) Crops, vegetation, forage growth, or postharvest residues are not sustained in the normal growing season over any portion of the lot or facility.
     (b) "Conservation district" means a subdivision of state government organized under chapter 89.08 RCW.
     (c) "Eligible person" means a person (i) licensed to produce milk under chapter 15.36 RCW who has a certified dairy nutrient management plan, as required by chapter 90.64 RCW; (ii) who owns an animal feeding operation and has a permit issued under chapter 90.48 RCW; or (iii) who owns an animal feeding operation and has a nutrient management plan approved by a conservation district as meeting natural resource conservation service field office technical guide standards.
     (d) "Livestock nutrient management equipment and facilities" means machinery, equipment, and structures used in the handling and treatment of livestock manure, such as aerators, agitators, alley scrapers, augers, dams, gutter cleaners, loaders, lagoons, pipes, pumps, separators, and tanks. The term also includes tangible personal property that becomes an ingredient or component of the equipment and facilities, including repair and replacement parts.
     (e) "Permit" means either a state waste discharge permit or a national pollutant discharge elimination system permit, or both.

Sec. 214   RCW 82.08.900 and 2006 c 151 s 4 are each amended to read as follows:
     (1) The tax levied by RCW 82.08.020 does not apply to:
     (a) Sales to an eligible person ((establishing or operating)) of an anaerobic digester; or ((to))
     (b) The sale of or charge made for labor and services rendered in respect to installing, constructing, repairing, cleaning, altering, or improving an anaerobic digester((,)) of or for an eligible person; or ((to))
     (c) Sales of tangible personal property that becomes an ingredient or component of ((the)) an eligible person's anaerobic digester during the course of installing, constructing, repairing, cleaning, altering, or improving the anaerobic digester. ((The anaerobic digester must be used primarily to treat livestock manure.))
     (2)(a) The department of revenue must provide an exemption certificate to an eligible person upon application by that person. The application must be in a form and manner prescribed by the department and must contain information regarding the location of the facility and other information as the department may require.
     (b) A person claiming an exemption under this section must keep records necessary for the department to verify eligibility under this section. The exemption is available only when the buyer provides the seller with an exemption certificate in a form and manner prescribed by the department. If the person claiming an exemption under subsection (1)(b) or (c) of this section is not an eligible person, the buyer may provide the seller with a copy of the exemption certificate of the eligible person that owns the anaerobic digester in respect to which the claim of exemption relates. The seller must retain a copy of the certificate for the seller's files.
     (3) The definitions in this subsection apply to this section and RCW 82.12.900 unless the context clearly requires otherwise:
     (a) "Anaerobic digester" means a facility ((that processes)) used primarily for processing manure from livestock into biogas and dried manure using microorganisms in a decomposition process within a closed, oxygen-free container.
     (b) "Eligible person" means any person establishing or operating an anaerobic digester to treat primarily livestock manure.
     (c) "Primarily" means more than fifty percent measured by volume or weight.

Sec. 215   RCW 82.08.980 and 2003 2nd sp.s. c 1 s 11 are each amended to read as follows:
     (1) The tax levied by RCW 82.08.020 shall not apply to charges made for labor and services rendered in respect to the constructing of new buildings ((by)) of or for a manufacturer engaged in the manufacturing of superefficient airplanes or ((by)) of or for a port district, to be leased to a manufacturer engaged in the manufacturing of superefficient airplanes, to sales of tangible personal property that will be incorporated as an ingredient or component of such buildings during the course of the constructing, or to labor and services rendered in respect to installing, during the course of constructing, building fixtures not otherwise eligible for the exemption under RCW 82.08.02565(2)(b). The exemption is available only when the buyer provides the seller with an exemption certificate in a form and manner prescribed by the department. The seller shall retain a copy of the certificate for the seller's files.
     (2) No application is necessary for the tax exemption in this section, however in order to qualify under this section before starting construction the port district must have entered into an agreement with the manufacturer to build such a facility. A person taking the exemption under this section is subject to all the requirements of chapter 82.32 RCW. In addition, the person must report as required under RCW 82.32.545 if the person is a manufacturer of superefficient airplanes.
     (3) The exemption in this section applies to buildings, or parts of buildings, that are used exclusively in the manufacturing of superefficient airplanes, including buildings used for the storage of raw materials and finished product.
     (4) For the purposes of this section, "superefficient airplane" has the meaning given in RCW 82.32.550.
     (5) This section expires July 1, 2024.

Sec. 216   RCW 82.12.841 and 2005 c 420 s 3 are each amended to read as follows:
     (1) The tax levied by RCW 82.12.020 does not apply in respect to:
     (a) The use of the following machinery and equipment by qualified farmers: No-till drills, minimum-till drills, chisels, plows, sprayers, discs, cultivators, harrows, mowers, swathers, power rakes, balers, bale handlers, shredders, transplanters, tractors two hundred fifty horsepower and over designed to pull conservation equipment on steep hills and highly erodible lands, and combine components limited to straw choppers, chaff spreaders, and stripper headers; and
     (b) The use of tangible personal property that will be incorporated as an ingredient or component of hay sheds ((by)) of a qualified farmer, during the course of constructing such hay sheds.
     (2) The eligibility requirements, conditions, and definitions in RCW 82.08.841 apply to this section.
     (3) This section expires January 1, 2011.

Sec. 217   RCW 82.12.890 and 2006 c 151 s 3 are each amended to read as follows:
     (1) The provisions of this chapter do not apply with respect to the use ((by an eligible person)) of tangible personal property that becomes an ingredient or component of livestock nutrient management equipment and facilities of an eligible person, as defined in RCW 82.08.890, or to labor and services rendered in respect to repairing, cleaning, altering, or improving eligible tangible personal property.
     (2)(a) To be eligible, the equipment and facilities must be used exclusively for activities necessary to maintain a livestock nutrient management plan.
     (b) The exemption applies to the use of tangible personal property or labor and services made after the livestock nutrient management plan is: (i) Certified under chapter 90.64 RCW; (ii) approved as part of the permit issued under chapter 90.48 RCW; or (iii) approved as required under RCW 82.08.890(4)(c)(iii).
     (3) The exemption certificate and recordkeeping requirements of RCW 82.08.890 apply to this section. The definitions in RCW 82.08.890 apply to this section.

Sec. 218   RCW 82.12.900 and 2006 c 151 s 5 are each amended to read as follows:
     The provisions of this chapter do not apply with respect to the use of anaerobic digesters by eligible persons, tangible personal property that becomes an ingredient or component of anaerobic digesters for operation by an eligible person, or the use of services rendered in respect to installing, repairing, cleaning, altering, or improving eligible tangible personal property by an eligible person establishing or operating an anaerobic digester, as defined in RCW 82.08.900. The anaerobic digester must be used primarily to treat livestock manure.

Sec. 219   RCW 82.12.980 and 2003 2nd sp.s. c 1 s 12 are each amended to read as follows:
     (1) The provisions of this chapter do not apply with respect to the use of tangible personal property that will be incorporated as an ingredient or component of new buildings for use by a manufacturer engaged in the manufacturing of superefficient airplanes or owned by a port district and to be leased to a manufacturer engaged in the manufacturing of superefficient airplanes, during the course of constructing such buildings, or to labor and services rendered in respect to installing, during the course of constructing, building fixtures not otherwise eligible for the exemption under RCW 82.08.02565(2)(b).
     (2) The eligibility requirements, conditions, and definitions in RCW 82.08.980 apply to this section.
     (3) This section expires July 1, 2024.

Sec. 220   RCW 82.32.045 and 2006 c 256 s 1 are each amended to read as follows:
     (1) Except as otherwise provided in this chapter, payments of the taxes imposed under chapters 82.04, 82.08, 82.12, 82.14, and 82.16 RCW, along with reports and returns on forms prescribed by the department, are due monthly within twenty-five days after the end of the month in which the taxable activities occur.
     (2)(a) Except as provided in (b) of this subsection, the department of revenue may relieve any taxpayer or class of taxpayers from the obligation of remitting monthly and may require the return to cover other longer reporting periods, but in no event may returns be filed for a period greater than one year. For these taxpayers, tax payments are due on or before the last day of the month next succeeding the end of the period covered by the return.
     (b) The provisions of (a) of this subsection do not apply to persons who makes retail sales as defined in RCW 82.04.050 (2) (b) or (c) or (3)(e), if the department determines that the effective administration of RCW 82.04.050, 82.04.051, 82.04.060, 82.04.190, 82.08.841, 82.08.890, 82.08.900, 82.08.980, 82.12.890, 82.12.900, 82.14.841, and sections 205 through 211 of this act requires the person to file returns and remit taxes on a monthly basis.
     (3) The department of revenue may also require verified annual returns from any taxpayer, setting forth such additional information as it may deem necessary to correctly determine tax liability.
     (4) Notwithstanding subsections (1) and (2) of this section, the department may relieve any person of the requirement to file returns if the following conditions are met:
     (a) The person's value of products, gross proceeds of sales, or gross income of the business, from all business activities taxable under chapter 82.04 RCW, is less than twenty-eight thousand dollars per year;
     (b) The person's gross income of the business from all activities taxable under chapter 82.16 RCW is less than twenty-four thousand dollars per year; and
     (c) The person is not required to collect or pay to the department of revenue any other tax or fee which the department is authorized to collect.

NEW SECTION.  Sec. 301   A new section is added to chapter 82.32 RCW to read as follows:
     (1) Taxpayers seeking a new seller's permit or to renew or reinstate a seller's permit must apply to the department in a form and manner prescribed by the department. The department must rule on applications within sixty days of receiving a complete application. An application must be denied if the department determines that, based on the nature of the applicant's business, the applicant is not entitled to make purchases at wholesale or is otherwise prohibited from using a seller's permit. The department may also deny an application if it determines that denial would be in the best interest of collecting taxes due under this title. The department's decision whether to approve or deny an application may be based on tax returns previously filed with the department by the applicant, a current or previous examination of the applicant's books and records by the department, information provided by the applicant in the master application and the seller's permit application, and other information available to the department.
     (2) Notwithstanding subsection (1) of this section, the department may issue a seller's permit to a taxpayer that has not applied for the permit if it appears to the department's satisfaction, based on the nature of the taxpayer's business activities and any other information available to the department, that the taxpayer is entitled to make purchases at wholesale.
     (3) Seller's permits issued by the department will be in a form prescribed by the department, which may include an electronic form, and must contain a unique identifying number assigned by the department.
     (4)(a) Except as otherwise provided in this section, seller's permits issued, renewed, or reinstated under this section will be valid for a period of forty-eight months from the date of issuance, renewal, or reinstatement.
     (b) A seller's permit issued to taxpayers who register with the department under RCW 82.32.030 after January 1, 2009, is valid for a period of twenty-four months and may be renewed for the period prescribed in (a) of this subsection (4).
     (c) A seller's permit is no longer valid if the permit holder's certificate of registration is revoked by department or the person otherwise ceases to engage in business.
     (5)(a) The department may revoke a seller's permit of a taxpayer for any of the following reasons:
     (i) The taxpayer used or allowed or caused its seller's permit to be used to purchase any item or service without payment of sales tax, but the taxpayer or other purchaser was not entitled to use the seller's permit for the purchase;
     (ii) The department issued the seller's permit to the taxpayer in error;
     (iii) The department determines that the taxpayer is no longer entitled to make purchases at wholesale; or
     (iv) The department closes the permit holder's tax reporting account with the department.
     (b) The notice of revocation must be in writing and is effective on the date specified in the revocation notice. The notice must also advise the taxpayer of its right to a review by the department.
     (c) The department may refuse to reinstate a seller's permit revoked under (a)(i) of this subsection until all taxes, penalties, and interest due on any improperly purchased item or service have been paid in full. In the event a taxpayer whose seller's permit has been revoked under this subsection reorganizes, the new business resulting from the reorganization is not entitled to a seller's permit until all taxes, penalties, and interest due on any improperly purchased item or service have been paid in full.
     (d) For purposes of this subsection, "reorganize" or "reorganization" means: (i) The transfer, however effected, of a majority of the assets of one business to another business where any of the persons having an interest in the ownership or management in the former business maintain an ownership or management interest in the new business, either directly or indirectly; (ii) a mere change in identity or form of ownership, however effected; or (iii) the new business is a mere continuation of the former business based on significant shared features such as owners, personnel, assets, or general business activity.
     (6) The department may provide lists of valid and revoked seller's permit numbers on its web site.
     (7) The department must provide by rule for the review of the department's decision to deny, revoke, or refuse to reinstate a seller's permit. Such review must be consistent with the requirements of chapter 34.05 RCW.
     (8) As used in this section, "seller's permit" has the same meaning as in RCW 82.04.470.

Sec. 302   RCW 82.04.470 and 2007 c 6 s 1201 are each amended to read as follows:
     (1) Unless a seller has taken from the buyer a ((resale certificate)) seller's permit, the burden of proving that a sale of tangible personal property, extended warranty, or of services, was not a sale at retail shall be upon the person who made it.
     (2) If a seller does not receive a ((resale certificate)) seller's permit at the time of the sale, have a ((resale certificate)) seller's permit on file at the time of the sale, or obtain a ((resale certificate)) seller's permit from the buyer within a reasonable time after the sale, the seller shall remain liable for the tax as provided in RCW 82.08.050, unless the seller can demonstrate facts and circumstances according to rules adopted by the department ((of revenue)) that show the sale was properly made without payment of retail sales tax.
     (3) ((The department may provide by rule for suggested forms for resale certificates or equivalent documents containing the information that will be accepted as resale certificates. The department shall provide by rule the categories of items or services that must be specified on resale certificates and the business classifications that may use a blanket resale certificate.
     (4) As used in this section, "resale certificate" means documentation provided by a buyer to a seller stating that the purchase is for resale in the regular course of business, or that the buyer is exempt from retail sales tax, and containing the following information)) A seller's permit must contain such information as required by the department, which may include, but is not limited to:
     (a) The name and address of the buyer;
     (b) The ((uniform business identifier or revenue registration number of the buyer, if the buyer is required to be registered)) seller's permit number issued by the department;
     (c) The type of business engaged in;
     (d) The categories of items or services to be purchased for resale or that are ((exempt)) otherwise to be purchased at wholesale, unless the buyer presents a blanket ((resale certificate)) seller's permit;
     (e) The date on which the ((certificate)) permit was provided to the seller;
     (f) A statement that the items or services purchased either: (i) Are purchased for resale in the regular course of business; or (ii) are ((exempt from tax pursuant to statute)) otherwise purchased at wholesale;
     (g) A statement that the buyer acknowledges that the buyer is solely responsible for purchasing within the categories specified on the ((certificate)) permit and that misuse of the resale ((or exemption)) privilege claimed on the ((certificate)) permit subjects the buyer to ((a penalty of fifty percent of the tax due)) revocation of the seller's permit, penalties as provided in RCW 82.32.290 and 82.32.291, in addition to the tax, interest, and any other penalties imposed by law;
     (h) The name of the individual authorized to sign the ((certificate)) permit, printed in a legible fashion;
     (i) The signature of the authorized individual; ((and))
     (j) The name of the seller;
     (k) The date the permit was issued, renewed, or reinstated by the department;
     (l) The date that the permit expires;
     (m) Instructions for renewing the permit; and
     (n) A statement that the department is authorized to obtain information concerning the buyer's purchase of items or services under the permit from the seller to verify whether the buyer was authorized to purchase such items or services without payment of retail sales tax.
     (((5))) (4) Subsection (((4))) (3)(h)((,)) and (i)((, and (j))) of this section does not apply if the ((certificate)) permit is provided in a format other than paper. If the ((certificate)) permit is provided in a format other than paper, the name of the individual providing the ((certificate)) permit must be included in the ((certificate)) permit.
     (5)(a) In lieu of a seller's permit issued by the department under section 301 of this act, a seller may accept from a nonresident buyer that is not required to be registered with the department under RCW 82.32.030 a properly completed:
     (i) Uniform sales and use tax exemption certificate developed by the multistate tax commission; or
     (ii) Uniform exemption certificate approved by the streamlined sales and use tax agreement governing board.
     (b) A seller who accepts a properly completed exemption certificate as authorized in (a) of this subsection is relieved of the obligation to collect and remit retail sales tax.
     (6) As used in this section, "seller's permit" means documentation issued by the department under section 301 of this act and provided by a buyer to a seller to substantiate a wholesale sale.

Sec. 303   RCW 82.08.050 and 2007 c 6 s 1202 are each amended to read as follows:
     (1) The tax hereby imposed shall be paid by the buyer to the seller, and each seller shall collect from the buyer the full amount of the tax payable in respect to each taxable sale in accordance with the schedule of collections adopted by the department pursuant to the provisions of RCW 82.08.060.
     (2) The tax required by this chapter, to be collected by the seller, shall be deemed to be held in trust by the seller until paid to the department, and any seller who appropriates or converts the tax collected to his or her own use or to any use other than the payment of the tax to the extent that the money required to be collected is not available for payment on the due date as prescribed in this chapter is guilty of a gross misdemeanor.
     (3) In case any seller fails to collect the tax herein imposed or, having collected the tax, fails to pay it to the department in the manner prescribed by this chapter, whether such failure is the result of his or her own acts or the result of acts or conditions beyond his or her control, he or she shall, nevertheless, be personally liable to the state for the amount of the tax, unless the seller has taken from the buyer a ((resale certificate)) seller's permit or uniform exemption certificate authorized under RCW 82.04.470, a copy of a direct pay permit issued under RCW 82.32.087, a direct mail form under RCW 82.32.730(5), or other information required under the streamlined sales and use tax agreement, or information required under rules adopted by the department.
     (4) Sellers shall not be relieved from personal liability for the amount of the tax unless they maintain proper records of exempt transactions and provide them to the department when requested.
     (5) Sellers are not relieved from personal liability for the amount of tax if they fraudulently fail to collect the tax or if they solicit purchasers to participate in an unlawful claim of exemption.
     (6) Sellers are not relieved from personal liability for the amount of tax if they accept an exemption certificate from a purchaser claiming an entity-based exemption if:
     (a) The subject of the transaction sought to be covered by the exemption certificate is actually received by the purchaser at a location operated by the seller in Washington; and
     (b) Washington provides an exemption certificate that clearly and affirmatively indicates that the claimed exemption is not available in Washington. Graying out exemption reason types on a uniform form and posting it on the department's web site is a clear and affirmative indication that the grayed out exemptions are not available.
     (7)(a) Sellers are relieved from personal liability for the amount of tax if they obtain a fully completed exemption certificate or capture the relevant data elements required under the streamlined sales and use tax agreement within ninety days, or a longer period as may be provided by rule by the department, subsequent to the date of sale.
     (b) If the seller has not obtained an exemption certificate or all relevant data elements required under the streamlined sales and use tax agreement within the period allowed subsequent to the date of sale, the seller may, within one hundred twenty days, or a longer period as may be provided by rule by the department, subsequent to a request for substantiation by the department, either prove that the transaction was not subject to tax by other means or obtain a fully completed exemption certificate from the purchaser, taken in good faith.
     (c) Sellers are relieved from personal liability for the amount of tax if they obtain a blanket exemption certificate for a purchaser with which the seller has a recurring business relationship. The department may not request from a seller renewal of blanket certificates or updates of exemption certificate information or data elements if there is a recurring business relationship between the buyer and seller. For purposes of this subsection (7)(c), a "recurring business relationship" means at least one sale transaction within a period of twelve consecutive months.
     (8) The amount of tax, until paid by the buyer to the seller or to the department, shall constitute a debt from the buyer to the seller and any seller who fails or refuses to collect the tax as required with intent to violate the provisions of this chapter or to gain some advantage or benefit, either direct or indirect, and any buyer who refuses to pay any tax due under this chapter is guilty of a misdemeanor.
     (9) The tax required by this chapter to be collected by the seller shall be stated separately from the selling price in any sales invoice or other instrument of sale. On all retail sales through vending machines, the tax need not be stated separately from the selling price or collected separately from the buyer. For purposes of determining the tax due from the buyer to the seller and from the seller to the department it shall be conclusively presumed that the selling price quoted in any price list, sales document, contract or other agreement between the parties does not include the tax imposed by this chapter, but if the seller advertises the price as including the tax or that the seller is paying the tax, the advertised price shall not be considered the selling price.
     (10) Where a buyer has failed to pay to the seller the tax imposed by this chapter and the seller has not paid the amount of the tax to the department, the department may, in its discretion, proceed directly against the buyer for collection of the tax, in which case a penalty of ten percent may be added to the amount of the tax for failure of the buyer to pay the same to the seller, regardless of when the tax may be collected by the department; and all of the provisions of chapter 82.32 RCW, including those relative to interest and penalties, shall apply in addition; and, for the sole purpose of applying the various provisions of chapter 82.32 RCW, the twenty-fifth day of the month following the tax period in which the purchase was made shall be considered as the due date of the tax.
     (11) Notwithstanding subsections (1) through (10) of this section, any person making sales is not obligated to collect the tax imposed by this chapter if:
     (a) The person's activities in this state, whether conducted directly or through another person, are limited to:
     (i) The storage, dissemination, or display of advertising;
     (ii) The taking of orders; or
     (iii) The processing of payments; and
     (b) The activities are conducted electronically via a web site on a server or other computer equipment located in Washington that is not owned or operated by the person making sales into this state nor owned or operated by an affiliated person. "Affiliated persons" has the same meaning as provided in RCW 82.04.424.
     (12) Subsection (11) of this section expires when: (a) The United States congress grants individual states the authority to impose sales and use tax collection duties on remote sellers; or (b) it is determined by a court of competent jurisdiction, in a judgment not subject to review, that a state can impose sales and use tax collection duties on remote sellers.
     (13) For purposes of this section, "seller" includes a certified service provider, as defined in RCW 82.32.020, acting as agent for the seller.

Sec. 304   RCW 82.08.130 and 1993 sp.s. c 25 s 702 are each amended to read as follows:
     (1) If a buyer normally is engaged in both consuming and reselling certain types of articles of tangible personal property and is not able to determine at the time of purchase whether the particular property acquired will be consumed or resold, the buyer may use a ((resale certificate)) seller's permit or, if eligible, a uniform exemption certificate authorized under RCW 82.04.470 for the entire purchase if the buyer principally resells the articles according to the general nature of the buyer's business. The buyer shall account for the value of any articles purchased with a ((resale certificate)) seller's permit or uniform exemption certificate authorized under RCW 82.04.470 that are used by the buyer and remit the deferred sales tax on the articles to the department.
     (2) A buyer who pays a tax on all purchases and subsequently resells an article or service at retail, without intervening use by the buyer, shall collect the tax from the purchaser as otherwise provided by law and is entitled to a deduction or credit on the buyer's tax return equal to, in the case of a deduction, the cost to the buyer of the property or service resold upon which retail sales tax has been paid, and in the case of a credit, the amount of state and local sales taxes paid with respect to the property or service resold. The deduction or credit is allowed only if the taxpayer keeps and preserves records that show the names of the persons from whom the articles or services were purchased, the date of the purchase, the type of articles or services, the amount of the purchase, and the tax that was paid.
     (3) The department ((shall)) must provide by rule for the refund or credit of retail sales tax paid by a buyer for purchases that are later ((sold at wholesale)) resold without intervening use by the buyer or for purchases that otherwise meet the definition of wholesale sale.
     (4) Nothing in this section may be construed to authorize a deduction or credit in respect to the purchase of services if the services are not of a type that can be sold at wholesale under the definition of wholesale sale in RCW 82.04.060.

Sec. 305   RCW 82.14B.042 and 2002 c 341 s 10 are each amended to read as follows:
     (1) The state enhanced 911 excise taxes imposed by this chapter must be paid by the subscriber to the local exchange company providing the switched access line or the radio communications service company providing the radio access line, and each local exchange company and each radio communications service company shall collect from the subscriber the full amount of the taxes payable. The state enhanced 911 excise taxes required by this chapter to be collected by the local exchange company or the radio communications service company are deemed to be held in trust by the local exchange company or the radio communications service company until paid to the department. Any local exchange company or radio communications service company that appropriates or converts the tax collected to its own use or to any use other than the payment of the tax to the extent that the money collected is not available for payment on the due date as prescribed in this chapter is guilty of a gross misdemeanor.
     (2) If any local exchange company or radio communications service company fails to collect the state enhanced 911 excise tax or, after collecting the tax, fails to pay it to the department in the manner prescribed by this chapter, whether such failure is the result of its own act or the result of acts or conditions beyond its control, the local exchange company or the radio communications service company is personally liable to the state for the amount of the tax, unless the local exchange company or the radio communications service company has taken from the buyer in good faith ((a properly executed resale certificate under RCW 82.14B.200)) documentation, in a form and manner prescribed by the department, stating that the buyer is not a subscriber or is otherwise not liable for the state enhanced 911 tax.
     (3) The amount of tax, until paid by the subscriber to the local exchange company, the radio communications service company, or to the department, constitutes a debt from the subscriber to the local exchange company or the radio communications service company. Any local exchange company or radio communications service company that fails or refuses to collect the tax as required with intent to violate the provisions of this chapter or to gain some advantage or benefit, either direct or indirect, and any subscriber who refuses to pay any tax due under this chapter is guilty of a misdemeanor. The state enhanced 911 excise taxes required by this chapter to be collected by the local exchange company or the radio communications service company must be stated separately on the billing statement that is sent to the subscriber.
     (4) If a subscriber has failed to pay to the local exchange company or the radio communications service company the state enhanced 911 excise taxes imposed by this chapter and the local exchange company or the radio communications service company has not paid the amount of the tax to the department, the department may, in its discretion, proceed directly against the subscriber for collection of the tax, in which case a penalty of ten percent may be added to the amount of the tax for failure of the subscriber to pay the tax to the local exchange company or the radio communications service company, regardless of when the tax is collected by the department. Tax under this chapter is due as provided under RCW 82.14B.061.

Sec. 306   RCW 82.14B.200 and 2002 c 341 s 12 are each amended to read as follows:
     (1) Unless a local exchange company or a radio communications service company has taken from the buyer ((a resale certificate or equivalent document under RCW 82.04.470)) documentation, in a form and manner prescribed by the department, stating that the buyer is not a subscriber or is otherwise not liable for the tax, the burden of proving that a sale of the use of a switched access line or radio access line was not a sale to a subscriber or was not otherwise subject to the tax is upon the person who made the sale.
     (2) If a local exchange company or a radio communications service company does not receive ((a resale certificate)) documentation, in a form and manner prescribed by the department, stating that the buyer is not a subscriber or is otherwise not liable for the tax at the time of the sale, have ((a resale certificate)) such documentation on file at the time of the sale, or obtain ((a resale certificate)) such documentation from the buyer within a reasonable time after the sale, the local exchange company or the radio communications service company remains liable for the tax as provided in RCW 82.14B.042, unless the local exchange company or the radio communications service company can demonstrate facts and circumstances according to rules adopted by the department of revenue that show the sale was properly made without payment of the state enhanced 911 excise tax.
     (3) The penalty imposed by RCW 82.32.291 may not be assessed on state enhanced 911 excise taxes due but not paid as a result of the improper use of ((a resale certificate)) documentation stating that the buyer is not a subscriber or is otherwise not liable for the state enhanced 911 tax. This subsection does not prohibit or restrict the application of other penalties authorized by law.

Sec. 307   RCW 82.32.087 and 2001 c 188 s 2 are each amended to read as follows:
     (1) The director may grant a direct pay permit to a taxpayer who demonstrates, to the satisfaction of the director, that the taxpayer meets the requirements of this section. The direct pay permit allows the taxpayer to accrue and remit directly to the department use tax on the acquisition of tangible personal property or sales tax on the sale of or charges made for labor and/or services, in accordance with all of the applicable provisions of this title. Any taxpayer that uses a direct pay permit shall remit state and local sales or use tax directly to the department. The agreement by the purchaser to remit tax directly to the department, rather than pay sales or use tax to the seller, relieves the seller of the obligation to collect sales or use tax and requires the buyer to pay use tax on the tangible personal property and sales tax on the sale of or charges made for labor and/or services.
     (2)(a) A taxpayer may apply for a permit under this section if the taxpayer (i) is subject to mandatory use of electronic funds transfer under RCW 82.32.080; or (ii) makes purchases subject to the taxes imposed under chapter 82.08 or 82.12 RCW in excess of ten million dollars per calendar year.
     (b) Application for a permit must be made in writing to the director in a form and manner prescribed by the department. A taxpayer who transacts business in two or more locations may submit one application to cover the multiple locations.
     (c) The director shall review a direct pay permit application in a timely manner and shall notify the applicant, in writing, of the approval or denial of the application. The department shall approve or deny an application based on the applicant's ability to comply with local government use tax coding capabilities and responsibilities; requirements for vendor notification; recordkeeping obligations; electronic data capabilities; and tax reporting procedures. Additionally, an application may be denied if the director determines that denial would be in the best interest of collecting taxes due under this title. The department shall provide a direct pay permit to an approved applicant with the notice of approval. The direct pay permit shall clearly state that the holder is solely responsible for the accrual and payment of the tax imposed under chapters 82.08 and 82.12 RCW and that the seller is relieved of liability to collect tax imposed under chapters 82.08 and 82.12 RCW on all sales to the direct pay permit holder. The taxpayer may petition the director for reconsideration of a denial.
     (d) A taxpayer who uses a direct pay permit must continue to maintain records that are necessary to a determination of the tax liability in accordance with this title. A direct pay permit is not transferable and the use of a direct pay permit may not be assigned to a third party.
     (3) Taxes for which the direct pay permit is used are due and payable on the tax return for the reporting period in which the taxpayer (a) receives the tangible personal property purchased or in which the labor and/or services are performed or (b) receives an invoice for such property or such labor and/or services, whichever period is earlier.
     (4) The holder of a direct pay permit shall furnish a copy of the direct pay permit to each vendor with whom the taxpayer has opted to use a direct pay permit. Sellers who make sales upon which the sales or use tax is not collected by reason of the provisions of this section, in addition to existing requirements under this title, shall maintain a copy of the direct pay permit and any such records or information as the department may specify.
     (5) A direct pay permit is subject to revocation by the director at any time the department determines that the taxpayer has violated any provision of this section or that revocation would be in the best interests of collecting the taxes due under this title. The notice of revocation must be in writing and is effective either as of the end of the taxpayer's next normal reporting period or a date deemed appropriate by the director and identified in the revocation notice. The taxpayer may petition the director for reconsideration of a revocation and reinstatement of the permit.
     (6) Any taxpayer who chooses to no longer use a direct pay permit or whose permit is revoked by the department, shall return the permit to the department and immediately make a good faith effort to notify all vendors to whom the permit was given, advising them that the permit is no longer valid.
     (7) Except as provided in this subsection, the direct pay permit may be used for any purchase of tangible personal property and any retail sale under RCW 82.04.050. The direct pay permit may not be used for:
     (a) Purchases of meals or beverages;
     (b) Purchases of motor vehicles, trailers, boats, airplanes, and other property subject to requirements for title transactions by the department of licensing;
     (c) Purchases for which a ((resale certificate)) seller's permit or uniform exemption certificate authorized under RCW 82.04.470 may be used;
     (d) Purchases that meet the definitions of RCW 82.04.050 (2) (e) and (f), (3) (a) through (d), (f), and (g), and (5); or
     (e) Other activities subject to tax under chapter 82.08 or 82.12 RCW that the department by rule designates, consistent with the purposes of this section, as activities for which a direct pay permit is not appropriate and may not be used.

Sec. 308   RCW 82.32.290 and 1985 c 414 s 2 are each amended to read as follows:
     (1)(a) It shall be unlawful:
     (i) For any person to engage in business without having obtained a certificate of registration as provided in this chapter;
     (ii) For the president, vice president, secretary, treasurer, or other officer of any company to cause or permit the company to engage in business without having obtained a certificate of registration as provided in this chapter;
     (iii) For any person to tear down or remove any order or notice posted by the department;
     (iv) For any person to aid or abet another in any attempt to evade the payment of any tax or any part thereof;
     (v) For any purchaser to fraudulently sign or furnish to a seller a ((resale certificate)) seller's permit or uniform exemption certificate authorized under RCW 82.04.470 without intent to resell the property purchased; or
     (vi) For any person to fail or refuse to permit the examination of any book, paper, account, record, or other data by the department or its duly authorized agent; or to fail or refuse to permit the inspection or appraisal of any property by the department or its duly authorized agent; or to refuse to offer testimony or produce any record as required.
     (b) Any person violating any of the provisions of this subsection (1) shall be guilty of a gross misdemeanor in accordance with chapter 9A.20 RCW.
     (2)(a) It shall be unlawful:
     (i) For any person to engage in business after revocation of a certificate of registration;
     (ii) For the president, vice president, secretary, treasurer, or other officer of any company to cause or permit the company to engage in business after revocation of a certificate of registration; or
     (iii) For any person to make any false or fraudulent return or false statement in any return, with intent to defraud the state or evade the payment of any tax or part thereof.
     (b) Any person violating any of the provisions of this subsection (2) shall be guilty of a class C felony in accordance with chapter 9A.20 RCW.
     (3) In addition to the foregoing penalties, any person who knowingly swears to or verifies any false or fraudulent return, or any return containing any false or fraudulent statement with the intent aforesaid, shall be guilty of the offense of perjury in the second degree; and any company for which a false return, or a return containing a false statement, as aforesaid, is made, shall be punished, upon conviction thereof, by a fine of not more than one thousand dollars. All penalties or punishments provided in this section shall be in addition to all other penalties provided by law.

Sec. 309   RCW 82.32.291 and 1993 sp.s. c 25 s 703 are each amended to read as follows:
     Any person who uses a ((resale certificate)) seller's permit to purchase items or services without payment of sales tax, or who uses a uniform exemption certificate developed by the multistate tax commission or approved by the streamlined sales and use tax agreement governing board to claim a purchase for resale exemption, and who is not entitled to use the seller's permit or exemption certificate for the purchase shall be assessed a penalty of ((fifty)) one hundred percent of the tax due, in addition to all other taxes, penalties, and interest due, on the improperly purchased item or service. The department may waive the penalty imposed under this section if it finds that the use of the seller's permit or exemption certificate was due to circumstances beyond the taxpayer's control or if the seller's permit or exemption certificate was properly used for purchases for dual purposes. The department shall define by rule what circumstances are considered to be beyond the taxpayer's control.

Sec. 310   RCW 82.32.330 and 2008 c 81 s 11 are each amended to read as follows:
     (1) For purposes of this section:
     (a) "Disclose" means to make known to any person in any manner whatever a return or tax information;
     (b) "Return" means a tax or information return or claim for refund required by, or provided for or permitted under, the laws of this state which is filed with the department of revenue by, on behalf of, or with respect to a person, and any amendment or supplement thereto, including supporting schedules, attachments, or lists that are supplemental to, or part of, the return so filed;
     (c) "Tax information" means (i) a taxpayer's identity, (ii) the nature, source, or amount of the taxpayer's income, payments, receipts, deductions, exemptions, credits, assets, liabilities, net worth, tax liability deficiencies, overassessments, or tax payments, whether taken from the taxpayer's books and records or any other source, (iii) whether the taxpayer's return was, is being, or will be examined or subject to other investigation or processing, (iv) a part of a written determination that is not designated as a precedent and disclosed pursuant to RCW 82.32.410, or a background file document relating to a written determination, and (v) other data received by, recorded by, prepared by, furnished to, or collected by the department of revenue with respect to the determination of the existence, or possible existence, of liability, or the amount thereof, of a person under the laws of this state for a tax, penalty, interest, fine, forfeiture, or other imposition, or offense((: PROVIDED, That)). However, data, material, or documents that do not disclose information related to a specific or identifiable taxpayer do not constitute tax information under this section. Except as provided by RCW 82.32.410, nothing in this chapter shall require any person possessing data, material, or documents made confidential and privileged by this section to delete information from such data, material, or documents so as to permit its disclosure;
     (d) "State agency" means every Washington state office, department, division, bureau, board, commission, or other state agency;
     (e) "Taxpayer identity" means the taxpayer's name, address, telephone number, registration number, or any combination thereof, or any other information disclosing the identity of the taxpayer; and
     (f) "Department" means the department of revenue or its officer, agent, employee, or representative.
     (2) Returns and tax information ((shall be)) are confidential and privileged, and except as authorized by this section, neither the department of revenue nor any other person may disclose any return or tax information.
     (3) This section does not prohibit the department of revenue from:
     (a) Disclosing such return or tax information in a civil or criminal judicial proceeding or an administrative proceeding:
     (i) In respect of any tax imposed under the laws of this state if the taxpayer or its officer or other person liable under Title 82 RCW is a party in the proceeding; or
     (ii) In which the taxpayer about whom such return or tax information is sought and another state agency are adverse parties in the proceeding;
     (b) Disclosing, subject to such requirements and conditions as the director ((shall)) prescribes by rules adopted pursuant to chapter 34.05 RCW, such return or tax information regarding a taxpayer to such taxpayer or to such person or persons as that taxpayer may designate in a request for, or consent to, such disclosure, or to any other person, at the taxpayer's request, to the extent necessary to comply with a request for information or assistance made by the taxpayer to such other person((: PROVIDED, That)). However, tax information not received from the taxpayer ((shall)) must not be so disclosed if the director determines that such disclosure would compromise any investigation or litigation by any federal, state, or local government agency in connection with the civil or criminal liability of the taxpayer or another person, or that such disclosure would identify a confidential informant, or that such disclosure is contrary to any agreement entered into by the department that provides for the reciprocal exchange of information with other government agencies which agreement requires confidentiality with respect to such information unless such information is required to be disclosed to the taxpayer by the order of any court;
     (c) Disclosing the name of a taxpayer with a deficiency greater than five thousand dollars and against whom a warrant under RCW 82.32.210 has been either issued or filed and remains outstanding for a period of at least ten working days. The department ((shall)) is not ((be)) required to disclose any information under this subsection if a taxpayer: (i) Has been issued a tax assessment; (ii) has been issued a warrant that has not been filed; and (iii) has entered a deferred payment arrangement with the department of revenue and is making payments upon such deficiency that will fully satisfy the indebtedness within twelve months;
     (d) Disclosing the name of a taxpayer with a deficiency greater than five thousand dollars and against whom a warrant under RCW 82.32.210 has been filed with a court of record and remains outstanding;
     (e) Publishing statistics so classified as to prevent the identification of particular returns or reports or items thereof;
     (f) Disclosing such return or tax information, for official purposes only, to the governor or attorney general, or to any state agency, or to any committee or subcommittee of the legislature dealing with matters of taxation, revenue, trade, commerce, the control of industry or the professions;
     (g) Permitting the department of revenue's records to be audited and examined by the proper state officer, his or her agents and employees;
     (h) Disclosing any such return or tax information to a peace officer as defined in RCW 9A.04.110 or county prosecuting attorney, for official purposes. The disclosure may be made only in response to a search warrant, subpoena, or other court order, unless the disclosure is for the purpose of criminal tax enforcement. A peace officer or county prosecuting attorney who receives the return or tax information may disclose that return or tax information only for use in the investigation and a related court proceeding, or in the court proceeding for which the return or tax information originally was sought;
     (i) Disclosing any such return or tax information to the proper officer of the internal revenue service of the United States, the Canadian government or provincial governments of Canada, or to the proper officer of the tax department of any state or city or town or county, for official purposes, but only if the statutes of the United States, Canada or its provincial governments, or of such other state or city or town or county, as the case may be, grants substantially similar privileges to the proper officers of this state;
     (j) Disclosing any such return or tax information to the Department of Justice, including the Bureau of Alcohol, Tobacco, Firearms and Explosives within the Department of Justice, the Department of Defense, the Immigration and Customs Enforcement and the Customs and Border Protection agencies of the United States Department of Homeland Security, the Coast Guard of the United States, and the United States Department of Transportation, or any authorized representative ((thereof)) of these federal agencies, for official purposes;
     (k) Publishing or otherwise disclosing the text of a written determination designated by the director as a precedent pursuant to RCW 82.32.410;
     (l) Disclosing, in a manner that is not associated with other tax information, the taxpayer name, entity type, business address, mailing address, revenue tax registration numbers, seller's permit numbers and the status of such permits, North American industry classification system or standard industrial classification code of a taxpayer, and the dates of opening and closing of business. This subsection ((shall)) must not be construed as giving authority to the department to give, sell, or provide access to any list of taxpayers for any commercial purpose;
     (m) Disclosing such return or tax information that is also maintained by another Washington state or local governmental agency as a public record available for inspection and copying under the provisions of chapter 42.56 RCW or is a document maintained by a court of record and is not otherwise prohibited from disclosure;
     (n) Disclosing such return or tax information to the United States department of agriculture for the limited purpose of investigating food stamp fraud by retailers;
     (o) Disclosing to a financial institution, escrow company, or title company, in connection with specific real property that is the subject of a real estate transaction, current amounts due the department for a filed tax warrant, judgment, or lien against the real property;
     (p) Disclosing to a person against whom the department has asserted liability as a successor under RCW 82.32.140 return or tax information pertaining to the specific business of the taxpayer to which the person has succeeded;
     (q) Disclosing such return or tax information in the possession of the department relating to the administration or enforcement of the real estate excise tax imposed under chapter 82.45 RCW, including information regarding transactions exempt or otherwise not subject to tax; or
     (r) Disclosing to local taxing jurisdictions the identity of sellers granted relief under RCW 82.32.430(5)(b)(i) and the period for which relief is granted.
     (4)(a) The department may disclose return or taxpayer information to a person under investigation or during any court or administrative proceeding against a person under investigation as provided in this subsection (4). The disclosure must be in connection with the department's official duties relating to an audit, collection activity, or a civil or criminal investigation. The disclosure may occur only when the person under investigation and the person in possession of data, materials, or documents are parties to the return or tax information to be disclosed. The department may disclose return or tax information such as invoices, contracts, bills, statements, resale or exemption certificates, or checks. However, the department may not disclose general ledgers, sales or cash receipt journals, check registers, accounts receivable/payable ledgers, general journals, financial statements, expert's workpapers, income tax returns, state tax returns, tax return workpapers, or other similar data, materials, or documents.
     (b) Before disclosure of any tax return or tax information under this subsection (4), the department ((shall)) must, through written correspondence, inform the person in possession of the data, materials, or documents to be disclosed. The correspondence ((shall)) must clearly identify the data, materials, or documents to be disclosed. The department may not disclose any tax return or tax information under this subsection (4) until the time period allowed in (c) of this subsection has expired or until the court has ruled on any challenge brought under (c) of this subsection.
     (c) The person in possession of the data, materials, or documents to be disclosed by the department has twenty days from the receipt of the written request required under (b) of this subsection to petition the superior court of the county in which the petitioner resides for injunctive relief. The court shall limit or deny the request of the department if the court determines that:
     (i) The data, materials, or documents sought for disclosure are cumulative or duplicative, or are obtainable from some other source that is more convenient, less burdensome, or less expensive;
     (ii) The production of the data, materials, or documents sought would be unduly burdensome or expensive, taking into account the needs of the department, the amount in controversy, limitations on the petitioner's resources, and the importance of the issues at stake; or
     (iii) The data, materials, or documents sought for disclosure contain trade secret information that, if disclosed, could harm the petitioner.
     (d) The department ((shall)) must reimburse reasonable expenses for the production of data, materials, or documents incurred by the person in possession of the data, materials, or documents to be disclosed.
     (e) Requesting information under (b) of this subsection that may indicate that a taxpayer is under investigation does not constitute a disclosure of tax return or tax information under this section.
     (5) Any person acquiring knowledge of any return or tax information in the course of his or her employment with the department of revenue and any person acquiring knowledge of any return or tax information as provided under subsection (3)(f), (g), (h), (i), (j), or (n) of this section, who discloses any such return or tax information to another person not entitled to knowledge of such return or tax information under the provisions of this section, is guilty of a misdemeanor. If the person guilty of such violation is an officer or employee of the state, such person ((shall)) must forfeit such office or employment and ((shall be)) is incapable of holding any public office or employment in this state for a period of two years thereafter.

Sec. 311   RCW 82.72.040 and 2004 c 254 s 6 are each amended to read as follows:
     (1) Telephone program excise taxes must be paid by the subscriber to the local exchange company providing the switched access line, and each local exchange company shall collect from the subscriber the full amount of the taxes payable. Telephone program excise taxes to be collected by the local exchange company are deemed to be held in trust by the local exchange company until paid to the department. Any local exchange company that appropriates or converts the tax collected to its own use or to any use other than the payment of the tax to the extent that the money collected is not available for payment on the due date as prescribed in this chapter is guilty of a gross misdemeanor.
     (2) If any local exchange company fails to collect telephone program excise taxes or, after collecting the tax, fails to pay it to the department in the manner prescribed by this chapter, whether such failure is the result of its own act or the result of acts or conditions beyond its control, the local exchange company is personally liable to the state for the amount of the tax, unless the local exchange company has taken from the buyer in good faith ((a properly executed resale certificate under RCW 82.72.070)) documentation, in a form and manner prescribed by the department, stating that the buyer is not a subscriber or is otherwise not liable for telephone program excise taxes.
     (3) The amount of tax, until paid by the subscriber to the local exchange company or to the department, constitutes a debt from the subscriber to the local exchange company. Any local exchange company that fails or refuses to collect telephone program excise taxes as required with intent to violate the provisions of this chapter or to gain some advantage or benefit, either direct or indirect, and any subscriber who refuses to pay any telephone excise tax is guilty of a misdemeanor.
     (4) If a subscriber has failed to pay to the local exchange company the telephone program excise taxes and the local exchange company has not paid the amount of the tax to the department, the department may, in its discretion, proceed directly against the subscriber for collection of the tax, in which case a penalty of ten percent may be added to the amount of the tax for failure of the subscriber to pay the tax to the local exchange company, regardless of when the tax is collected by the department. Telephone program excise taxes are due as provided under RCW 82.72.050.

Sec. 312   RCW 82.72.070 and 2004 c 254 s 9 are each amended to read as follows:
     (1) Unless a local exchange company has taken from the buyer ((a resale certificate or equivalent document under RCW 82.04.470)) documentation, in a form and manner prescribed by the department, stating that the buyer is not a subscriber or is otherwise not liable for telephone program excise taxes, the burden of proving that a sale of the use of a switched access line was not a sale to a subscriber or was otherwise not subject to telephone program excise taxes is upon the person who made the sale.
     (2) If a local exchange company does not receive ((a resale certificate)) documentation, in a form and manner prescribed by the department, stating that the buyer is not a subscriber or is otherwise not liable for telephone program excise taxes at the time of the sale, have ((a resale certificate)) such documentation on file at the time of the sale, or obtain ((a resale certificate)) such documentation from the buyer within a reasonable time after the sale, the local exchange company remains liable for the telephone program excise taxes as provided in RCW 82.72.040, unless the local exchange company can demonstrate facts and circumstances according to rules adopted by the department that show the sale was properly made without payment of telephone program excise taxes.
     (3) The penalty imposed by RCW 82.32.291 may not be assessed on telephone program excise taxes that are due but not paid as a result of the improper use of ((a resale certificate)) documentation stating that the buyer is not a subscriber or is otherwise not liable for telephone program excise taxes. This subsection does not prohibit or restrict the application of other penalties authorized by law.

NEW SECTION.  Sec. 401   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION.  Sec. 402   This act must be liberally construed in order to carry out its purposes.

NEW SECTION.  Sec. 403   This act takes effect January 1, 2010.

NEW SECTION.  Sec. 404   The effective date in section 403 of this act may not be construed as preventing the department of revenue from accepting applications for, or issuing, seller's permits before January 1, 2010, or taking any other action before January 1, 2010, necessary to ensure the effective implementation of this act.

NEW SECTION.  Sec. 405   Part headings used in this act are not any part of the law.

NEW SECTION.  Sec. 406   If chapter . . ., Laws of 2009 (Engrossed Substitute House Bill No. 2278 or any other bill making substantively identical amendments to RCW 82.08.890 and 82.12.890) is enacted, sections 213 and 217, chapter . . ., Laws of 2009 (section 213 and 217 of this act) are null and void.